This is shown in a study by the economist Maher Asal at University West in Sweden. Previous research provides overwhelming evidence that diversifying across countries in a stock portfolio is more lucrative than diversifying by sector. But it has been unclear what is really the case in the euro area. Now Maher Asal has managed to show that investors in the euro area succeed best with stock portfolios containing a balance of shares in different sectors.
Member states in the euro area pursue a joint monetary policy and have a joint exchange rate. However, fiscal policies remain largely domestic matters in the separate countries. The spread of economic troubles in one euro country to other euro countries has been a recurrent theme in news reports recently. What Maher Asal has studied is the impact of the currency union on the stock market. The euro was introduced in 1999, and the study covers the years 1992-2009. Asal compares the periods before and after the introduction of the euro.
“In the pre-euro days stock markets were segmented, so risk-adjusted yields could be realized by diversifying across countries. Now industrial sectors appear segmented instead, owing to differences in taxes and regulations. The sectors are different in character,” says Maher Asal.
Within the euro area currency risks have been eliminated, and interest levels and inflation in the different countries have been leveled. On the other hand, differences between industries have not been evened out. Industrial policies differ for the various industrial sectors. This has consequences for how much is invested in research and development, for example, and how mergers, acquisitions, and bankruptcies are dealt with.
Maher Asal’s study covers 19 sectors, and the results show that shares from three of them are especially important to have in a wisely composed stock portfolio. The three sectors are construction, chemicals, and raw materials, such as forestry and mining. Maher Asal’s findings are based on econometric analyses of more than100 000 observations in databases containing information about share prices, etc.
For more information please contact Maher Asal, + 46 768 509 002, firstname.lastname@example.org
Reference: The Impact of the Euro on Sectoral Equity Returns and Portfolio Risk, Asal, M, International Advances in Economic Research, Volume 17, number 2, May 2011
Charlotta Sjöstedt | idw
How Strong Brands Translate into Money
15.11.2016 | Kühne Logistics University - Wissenschaftliche Hochschule für Logistik und Unternehmensführung
Demographic change depresses tax revenues
04.11.2016 | Fraunhofer-Institut für Angewandte Informationstechnik FIT
An important step towards a completely new experimental access to quantum physics has been made at University of Konstanz. The team of scientists headed by...
Yersiniae cause severe intestinal infections. Studies using Yersinia pseudotuberculosis as a model organism aim to elucidate the infection mechanisms of these...
Researchers from the University of Hamburg in Germany, in collaboration with colleagues from the University of Aarhus in Denmark, have synthesized a new superconducting material by growing a few layers of an antiferromagnetic transition-metal chalcogenide on a bismuth-based topological insulator, both being non-superconducting materials.
While superconductivity and magnetism are generally believed to be mutually exclusive, surprisingly, in this new material, superconducting correlations...
Laser-driving of semimetals allows creating novel quasiparticle states within condensed matter systems and switching between different states on ultrafast time scales
Studying properties of fundamental particles in condensed matter systems is a promising approach to quantum field theory. Quasiparticles offer the opportunity...
Among the general public, solar thermal energy is currently associated with dark blue, rectangular collectors on building roofs. Technologies are needed for aesthetically high quality architecture which offer the architect more room for manoeuvre when it comes to low- and plus-energy buildings. With the “ArKol” project, researchers at Fraunhofer ISE together with partners are currently developing two façade collectors for solar thermal energy generation, which permit a high degree of design flexibility: a strip collector for opaque façade sections and a solar thermal blind for transparent sections. The current state of the two developments will be presented at the BAU 2017 trade fair.
As part of the “ArKol – development of architecturally highly integrated façade collectors with heat pipes” project, Fraunhofer ISE together with its partners...
19.01.2017 | Event News
10.01.2017 | Event News
09.01.2017 | Event News
19.01.2017 | Earth Sciences
19.01.2017 | Life Sciences
19.01.2017 | Physics and Astronomy